You need to recommend an authentication solution for the planned implementation of Dynamics 365. What should you include in the recommendation?

Dynamics 365 authenticates users via Microsoft Entra ID. For organizations with an existing on-premises Active Directory, a hybrid identity model is recommended. Synchronized identities, specifically using Password Hash Synchronization (PHS), is Microsoft's preferred and most common approach. This method synchronizes user identity data and a hash of the user's password from the on-premises directory to Microsoft Entra ID. It provides a seamless single sign-on (SSO) experience for users accessing cloud applications like Dynamics 365 with their corporate credentials, without the architectural complexity and on-premises infrastructure dependency of a federated solution.

B. While using an existing Office 365 tenant is a deployment best practice, it describes the identity platform (the tenant) rather than the specific authentication method itself.

C. Creating a new tenant is an architectural anti-pattern that isolates identities, increases management complexity, and hinders integration between Dynamics 365 and other Microsoft cloud services.

D. Federated identities are a valid but more complex authentication model. They are typically implemented only when specific requirements, such as smart card authentication, cannot be met by synchronization.

1. Microsoft Entra Documentation, "What is hybrid identity with Microsoft Entra ID?": This document outlines the different hybrid identity models. It describes synchronized identity as a core model where on-premises directory objects are synchronized to the cloud.

Source: Microsoft Learn. https://learn.microsoft.com/en-us/entra/identity/hybrid/whatis-hybrid-identity (Section: "How does hybrid identity work?")

2. Microsoft Entra Documentation, "Choose the right authentication method for your Microsoft Entra hybrid identity solution": This guide explicitly compares authentication methods and recommends Password Hash Synchronization (a form of synchronized identity) for most scenarios due to its simplicity and high availability.

Source: Microsoft Learn. https://learn.microsoft.com/en-us/entra/identity/hybrid/connect/choose-ad-authn (Section: "Password hash synchronization")

3. Power Platform Admin Center Documentation, "Multi-tenant deployment": This document explains the benefits of a single-tenant strategy for Dynamics 365 and other Power Platform apps, highlighting the challenges of a multi-tenant approach, which supports why creating a new tenant (Option C) is incorrect.

Source: Microsoft Learn. https://learn.microsoft.com/en-us/power-platform/admin/plan-multi-tenant-deployment (Section: "Single tenant versus multi-tenant")